An acceleration of supply growth and continued deceleration in demand growth is expected to result in declining occupancy levels at U.S. hotels in 2017. That’s the first such decline in eight years, according to PwC US’ updated lodging forecast.
The forecast, released today, anticipates occupancy levels will remain flat in 2016, and average daily rate will drive a 2.9% increase in RevPAR. Supply growth continues to be slightly below previous estimates (1.6%), according to the report.
Supply growth is expected to reach a long-term average of 1.9%. ADR growth is expected to slow driving a below-inflationary RevPAR increase of 1.7%, the smallest increase since the end of the recession.
PwC’s outlook, based on an economic forecast from Oxford Economics, notes that after a tepid first half, real GDP in the third quarter increased 2.9%, driven by a combination of modest increases in consumer spending and stronger-than-expected exports.